Chapter 13 is reorganization or consolidation bankruptcy. In Chapter 13, you make a monthly payment for 3 to 5 years and then you receive the discharge. Chapter 13 is similar to Chapter 11 business bankruptcy, but it’s for individuals or married couples.
Chapter 13 is a bankruptcy option if you are not eligible for Chapter 7, if you are above median income and don’t pass the means test, if you own a house with non-exempt equity or have other prior, current, or future non-exempt assets that would be sold or seized in Chapter 7, or you had a Chapter 7 within the last 8 years, or for many other reasons and objectives. Some forms of relief are only available in Chapter 13.
Chapter 13 permits the debtor time to pay priority taxes or child support arrears; allows people to catch up on mortgages; eliminates unsecured second mortgages; crams down vehicle loans, helps with student loans, helps with taxes, keeps non-exempt assets, bifurcates liens, strips liens, among other benefits.
Being over the median income is not an automatic bar to filing bankruptcy. We have very extensive experience with Chapter 13 above median income debtors compared to other attorneys in Maryland. It is extremely important to hire an attorney who is knowledgeable about bankruptcy rules in order to get the best results.
Chapter 13 Plans are not mechanical, so the results can be very different depending on which lawyer your choose to assist you against your creditors’ attorneys. The bankruptcy lawyer you hire will negotiate and litigate the terms of the 13 Plan, including the monthly payment amount, against your creditors’ attorneys. In effect, the lawyer you choose can drastically affect your bottom line.